The Florida Department of Revenue has been focused on auditing florists for sales and use tax audits. I remember being told at an early age that sending flowers says “I love you” to the recipient. As I have gotten older, I have also heard (and seen) that sending flowers also says, “I’m sorry.” Who doesn’t love flowers, right? The FL Dept. of Revenue (“FDOR”) apparently likes flowers too. They “like” flowers enough to give them special statutory sales and use tax treatment. This article is aimed to help florists understand the unique Florida sales and use tax treatment of transactions for their industry.
Typical experience with Florida tax laws would tell hold that the sale of an item of tangible personal property (“TPP”) to someone in Florida, then you charge them sales tax. If you sell TPP to a person outside Florida, then it is not subject to Florida sales tax. In most instances, this would be an accurate guidepost. However, Florists have to deal with very usual sales tax laws in Florida and many other state. The difference is tax treatment catches many florists and their tax professionals off guard.
Section 212.05(1)(l), Florida Statutes (“F.S.”), provides:
Florists located in this state are liable for sales tax on sales to retail customers regardless of where or by whom the items sold are to be delivered. Florists located in this state are not liable for sales tax on payments received from other florists for items delivered to customers in this state.
As you can see, the statute is contrary to the guiding sales tax principle noted above, specifically providing that Florida based florists are liable for sales tax on sales to customers regardless of where or by whom the items sold are to be delivered. Florida even has an administrative rule to provide more guidance to florists. Rule 12A-1.047 specifically provides:
(1) Florists are engaged in the business of selling tangible personal property at retail and their sales of flowers, wreaths, bouquets, potted plants and other such items of tangible personal property are taxable.
(2) Where florists conduct transactions through a florists' telegraphic delivery association, the following rules will apply in the computation of the tax, which will be on the entire amount paid by the customer without any deductions whatsoever:
(a) On all orders taken by a Florida florist and telegraphed to a second florist in Florida for delivery in the state, the sending florist is held liable for the tax.
(b) In cases where a Florida florist receives an order pursuant to which he gives telegraphic instructions to a second florist located outside Florida for delivery of flowers to a point outside Florida, tax will likewise be owing with respect to the total receipts of the sending florist from the customer who places the order.
(c) In cases where Florida florists receive telegraphic instructions from other florists located either within or outside of Florida for delivery of flowers, the receiving florist will not be held liable for tax with respect to any receipts which he may realize from the transaction. In this instance, if the order originated in Florida, the tax will be due from and payable by the Florida florist who first received the order and gave telegraphic instructions to the second florist.
(3) All retail sales of cut flowers and potted plants by florists are taxable.
So, what does this mean for florist? In the simplest terms, the default rule is that a Florida based florist needs to collect sales tax on all sales that originate with a Florida based florists, regardless of where the flowers are created or delivered. One exception to the rule is that florists are not liable for sales tax on payments received from other florists. If you are a florist reading this article, you are very familiar with “FTD” type sales and this exception should make perfect sense to you. Other exemption would be if the customer is a tax exempt organization, such as a 501(c)(3) tax exempt church, that provides a valid exemption certificate and the payment is made by the organization.
As one florist found out with brutal consequences, the same rules apply to Florida based florists even if the flowers are prepared and delivered outside the United States. American Business USA Corp runs a florist’s website with sales primarily going to Central America. Based on advice from their tax advisor, the company only collected sales tax on sales for flowers that were delivered to an address in Florida. The Department of Revenue audited the company and assessed over $100,000 of taxes, penalties, and interest for the orders accepted by the florist that were ultimately prepared and delivered outside of Florida. The florists fought back and lost in the Florida Supreme Court. The florists appealed to the US Supreme Court, but the court declined to hear the case. While our firm may disagree with the Court’s findings, it would take one hell of a fight challenge this law. There is a link at the end of this article to articles on the American Business USA Corp case.
The bottom line for florists is that you need to educate yourself on the proper sales tax treatment for your sales. We’ve received calls from several florists over the last couple of months that are under sales tax audit, which entails reviewing 3 years of your company for mistakes in sales tax compliance. Your company is liable for the tax, even if your company did not collect the tax. If you have not been contacted by the Department through an audit notice or other communication on sales tax, then you may have the opportunity to enter the voluntary disclosure (“VD”) program. There is link to an article at the end providing more details about the VD program.
Our firm has handled hundreds of audits and voluntary disclosures for every industry you can imagine in Florida, including florist. Our partners are both CPAs/accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We offer a free initial consultation and can help you identify the tax issues associated with your business and help you identify the best way to correct prior reporting errors while simultaneously helping you remedy the process so that you will correctly report going forward. The VD program is not available if you have already been contacted by the FDOR. So, time is of the essence if you need to utilize that program to correct prior mistakes. It is impossible to know when the Florida DOR will contact you so take the necessary steps to protect your business.
About the author: Matthew Parker is a sales and use tax attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., based in the firm's Tampa office. Mr. Parker's practice includes state tax audits and controversies involving sales and use tax and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Parker received his law degree and L.L.M. in Taxation from the University of Florida and worked as a sales tax auditor for the Florida Department of Revenue for four years. To learn more about Mr. Parker, then read his firm bio.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended clients against Florida sales and use taxes for more than 25 years with over 100 years of cumulative experience working for our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We also have former Department of Revenue agents on staff who know how the tax agents think. With offices in Fort Lauderdale, Tampa, & Tallahassee, the law offices of Moffa, Sutton, & Donnini, PA represent taxpayers and business owners throughout the entire State of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
Sec. 212.05(1)(l), F.S. – Sales tax treatment of florists
Rule 12A-1.047 – Florists
ADDITIONAL RESOURCES
FL TAXATION OF FLORISTS CASE DENIED CERT BY US SUPREME COURT, published February 21, 2017, by James Sutton, CPA, Esq.
FLORIDA REEMPLOYMENT TAX AUDITS – THE DOR IS TRYING OT RAISE YOUR TAX RATE, published October 10, 2018, by Matthew Parker, Esq.
WHAT SERVICES ARE SUBJECT TO SALES TAX IN FLORIDA?, published May 1, 2012, by James Sutton, CPA, Esq.
FLORIDA SALES TAX – VOLUNTARY DISCLOSURE PROGRAM, published April 9, 2018, by Jeanette Moffa, Esq.